A settlement was reached! SK Innovation may compensate LG Energy 2 trillion won

The legal dispute between LG Energy Solution (hereinafter referred to as "LG Energy") and SK Innovation (hereinafter referred to as "SK Innovation") has lasted for two years. The US International Trade Commission (ITC) made a final ruling against SK Innovation in February this year. The two companies recently announced that they have reached a settlement and SK Innovation will pay 2 trillion won in compensation to LG Energy.

BusinessKorea reported that 1 trillion won of the compensation will be paid in cash, and the rest will be paid in the form of royalties. They will stop the relevant lawsuits and there will be no more disputes between the two parties in the next 10 years.

LG Energy and SK Innovation jointly stated: "We have chosen constructive competition and friendly cooperation to promote the development of the electric vehicle battery industry in South Korea and the United States. At the same time, we will work together to strengthen the Biden administration's battery supply chain and its green policies based on this. We also express our gratitude to the South Korean and US governments for helping us reach an agreement."

Georgia Senators Raphael Warnock and Jon Ossoff also reportedly contributed to this happy ending by lobbying the White House and the Office of the U.S. Trade Representative and approaching the two Korean companies so that SK Innovation could continue to invest in Georgia.

The report said that during the litigation between LG Energy and SK Innovation, Chinese electric vehicle battery manufacturers have grown rapidly, posing a threat to the two companies and the South Korean government's energy policy. Last year, CATL competed with LG Energy for the "top spot" in the global electric vehicle battery market. In January and February of this year, CATL consolidated its leading position by increasing its market share. According to market research firm SNE Research, global CATL battery usage soared 272.1% to 8GWh, and the company's market share almost doubled from 17.3% to 31.7%.

In addition, BYD beat Samsung SDI and SK Innovation to rank fourth in January and February this year. In these months, BYD's global battery usage reached 1.8GWh, a surge of 401.8% over the same period last year; AVIC Lithium Battery ranked seventh with 0.8GWh, and Guoxuan High-tech ranked ninth with 0.5GWh. The use of batteries produced by these two Chinese companies increased by about 800% and 153% respectively.

Industry experts said that Korean electric vehicle battery manufacturers will accelerate business activities mainly in the United States and Europe under the agreement. The U.S. electric vehicle market is expected to show rapid growth as the government attaches importance to climate change response and environmental protection. In Europe, Chinese electric vehicle battery manufacturers are increasing their market share at a very fast pace.

After the signing of the agreement, SK Innovation is likely to continue to build factories in Georgia's commercial areas while preparing for the listing of its subsidiary SKIET. SK Innovation is currently building two factories in Georgia at a cost of 2.9 trillion won. The first factory with a capacity of 9.8GWh will be used for Volkswagen's MEB platform, and the second factory with a capacity of 11.7GWh will be supplied to Ford. The first factory is scheduled to be put into commercial operation next year, and the company also plans to build more factories.

SK Innovation issued a statement today (12) saying that the company will further accelerate the stable operation of the first factory in Georgia and the construction of the second factory. In addition, we will actively increase investment to build an electric vehicle battery ecosystem at home and abroad.

Meanwhile, LG Energy is expected to go public this year. The company currently has a backlog of more than 150 trillion won, and in order to digest these orders, the company invests more than 3 trillion won in equipment each year. In addition, LG Energy also plans to increase its joint investment with General Motors. The two companies are currently investing 2.7 trillion won in Lordstown, Ohio to build a 35-kilowatt-hour power plant, which will be put into operation next year. They will start building another plant of the same size in 2023.